TMI Blog2023 (12) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax was offered at special rates under the provisions of sec.115BBE of the Act. The assessee s explanation before the Ld.CIT(A) which were accepted by the Ld.CIT(A) were found under the erroneous appreciation of facts by the Ld.CIT(A), wherein, there was no whisper or observation on the source of investment in excess stock found during the survey. CIT(A) has recorded that the assessee has offered income on account of excess stock found during the survey by crediting the capital amount of the assessee and subsequently, adding the excess stock to the closing stock in the balance sheet, the stock becomes part of regular books of accounts of the assessee and was made available for subsequent sale - Also further observed that the AO has not rejected the books of accounts of the assessee and rather accepted the entries passed in the books of accounts. We cannot subscribe to the view expressed by the CIT(A), since the AO has accepted the income offered by the assessee comes under the head Income from Other Sources and offered higher rate of tax on the said income, therefore, there was no occasion for the AO to go into the integrities of the books of accounts to make them liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 976/- on account of excess stock found during the course of survey proceedings, have offered tax in accordance with provisions of section 115BBE of the Act, showing his income from other sources, has shifted its stand, submitted a revised computation moving the undisclosed income surrendered under the head of income Income from other sources to Income from Business and Profession , with a plea that the impugned excess stock was accumulated from regular business activities and therefore was in the nature of Business Income. Ld.AO without giving any finding on this issue, has proceeded with the original computation, wherein, the appellant has calculated tax u/s. 115BBE of the Act. Aggrieved with the order of Ld.AO, assessee filed an appeal with the Ld.CIT(A) which was allowed and therefore, against such order of Ld.CIT(A), now the revenue is in appeal before us. 4. At the out-set, Ld.Sr. DR submitted that the assessee was subjected to a survey proceedings u/s. 133A of the Act, conducted on 18.01.2018. During the proceedings, statement of the assessee was recorded and the assessee himself has admitted that on physical verification, excess stock of Rs. 2,01,25,976/- was found and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income, thereby, has admitted that the undisclosed stock was part of the business of assessee. b. From the order of Hon ble Jurisdictional High Court in the case of Dhanush General Store (Supra) it is emerged that the assessee has shown the income trading and P L account but not in computation of income. However, in the present case which is distinguished on the facts and verifiable from the records that the amount surrendered was duly considered in the Audited P L account and finally was became part of the taxable income in the computation of income. c. During the survey Statement of Mr Suresh Kumar Agarwal as a partner of the assessee partnership firm were taken on oath u/s 131 of the Income Tax Act. Q no 3 and answer given are relevant, which was place in paper book of the assessee at page 9-12, the same is reproduced as under: 9. On perusal of the above question and answer offered by the assessee during the survey proceedings, it is very clear that the excess stock was found in the business premises of the assessee on physical verification by the survey team with the help of employees of the assessee. Assessee, without objecting to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee is liable to pay tax only upon such income as can be in law included in his total income and which can be lawfully assessed under the Act. On this aspect, the Ld. AR submitted before us that the decision of the Hon ble Kolkata High Court in the case of CIT v. Baskar Mitter, wherein, the observations of the Hon ble Kolkata High Court on this issue are found in Para No.8 of the said order, which is extracted as under: 8. The controversy raised in the second question is as to whether the annual letting value of the property determined by the Tribunal could be a figure lower than that returned by the assessee. The principles for determining the annual letting value under s. 23 are now well- settled and if the value returned is not in accordance with such principles, it is open to the assessee to contend that the value as may be determined upon correct application of the law should form the basis of assessment. The Revenue authorities, in our view, cannot be heard to say that merely because the assessee has returned a figure which is higher than the annual value determined in accordance with the correct legal principles, such higher amount and not the correct amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess stock (which was undisputedly accepted by the assessee), the answer to the query pertaining to investment, the assessee responded that he does not have any evidence with respect to source of investment in this excess stock. Therefore, he was unable to give any explanation on the same. The assessee further admitted that since he was not able to explain the source of investment in excess stock, the amount invested in such excess stock which is not from the regular income of the assessee. Therefore, the same should be considered as undisclosed income of the assessee for the relevant year i.e. FY 2017-18 (AY 2018-19). As per return of income filed by the assessee, copy of the same was furnished before us. The assessee himself has declared undisclosed income in excess stock as chargeable to income tax at special rates and therefore, under Schedule-SI at Item No.13, the amount of Rs. 2,01,25,976/- was shown as income chargeable at the rate of 60% and tax of Rs. 1,20,75,586/- was paid. This fact was also apparent from the original computation of the assessee which was available at assessee s Paper Book on Page Nos. 22-23, wherein, the surrender income was shown as income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself has observed that the excess stock or unexplained investment or cash surrender during the course of survey operations was nothing, but the accumulation of profits which the assessee has been systematically enjoying and hence difference detected during the survey and surrendered as assessable as undisclosed income, thereby, he has admitted that the undisclosed stock was part of the business of the assessee. However, no such observations were recorded by the AO in the present case neither the assessee has offered any explanations during the survey proceedings while statements of the assessee were recorded or afterwards during the assessment or appellate stage supported with any cogent material evidence of such source. It was also the fact in the case of M/s. Shree Sita Udyog v. DCIT that the stock physically verified was the same stock in which the assessee was dealing with i.e. Dhan Rice etc. Therefore, there was no ambiguity pertaining to whether the stock relates to business of the assessee or not. In such circumstances, the facts of the case are that in the case of M/s.Shree Sita Udyog v. DCIT, and Facts of the present case are altogether on different footing and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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